Intermediate terms

Essential Property Management Terms

This curated collection includes key terms that might be helpful when exploring property management and operations. It covers the day-to-day business of running an investment property, from tenant relations to financial record-keeping. These terms were selected based on common questions and areas where investors often need clarity.

Learning Path

Effective Gross Income

Effective Gross Income (EGI) is a realistic measure of a property's total potential revenue, calculated by subtracting estimated vacancy and credit losses from its Potential Gross Income (PGI). It provides a more accurate picture of a property's income-generating capability for financial analysis.

Intermediate12-13 min

Property Management Agreement

A Property Management Agreement is a legally binding contract between a property owner and a property manager, detailing the scope of services, responsibilities, fee structures, and terms for managing a real estate asset.

Intermediate5 min

Property Manager

A property manager is an individual or company hired by a real estate investor to handle the daily operations, maintenance, and tenant relations for a rental property, aiming to preserve asset value and maximize rental income.

Intermediate13 min

Profit and Loss Statement

A financial report summarizing a property's revenues, costs, and expenses over a specific period, typically a quarter or a year, to determine its net profit or loss.

Intermediate5 min

Property Management Software

Property Management Software (PMS) is a digital platform designed to streamline and automate the daily operations of managing rental properties, from tenant screening and rent collection to maintenance and financial reporting.

Intermediate13 min

Capital Expenditure Budget

A Capital Expenditure Budget is a financial plan outlining anticipated costs for major property repairs, renovations, and improvements that extend asset life or enhance value over a specific period.

Intermediate5-6 min

Financial Reporting

Financial reporting in real estate involves systematically recording, summarizing, and presenting financial transactions and performance data for investment properties. It provides a clear picture of an asset's financial health, crucial for informed decision-making, tax compliance, and communication with stakeholders.

Intermediate5 min

Property Inspection

A property inspection is a visual examination of a property's condition by a qualified professional to identify defects, safety hazards, and maintenance needs before purchase.

Intermediate13-14 min

Net Operating Income

Net Operating Income (NOI) is a key real estate metric representing a property's annual income after deducting all operating expenses, but before accounting for debt service, income taxes, and capital expenditures.

Intermediate11-12 min

Delinquent Rent

Delinquent rent refers to rental payments that have not been made by the due date specified in the lease agreement, often incurring late fees and initiating a formal collection process.

Intermediate1-2 min

Contingency Fund

A contingency fund in real estate is a dedicated reserve of money set aside to cover unforeseen property-related expenses, major repairs, or periods of income loss, safeguarding an investment from unexpected financial shocks.

Intermediate12-13 min

Tenant Screening

Tenant screening is the process landlords use to evaluate potential renters, assessing their reliability, financial stability, and past rental behavior to minimize risks and ensure a good fit for the property.

Beginner15-18 min

Fair Housing Act

The Fair Housing Act is a federal law prohibiting discrimination in the sale, rental, and financing of housing based on race, color, religion, sex, national origin, familial status, and disability.

Intermediate12-13 min

Landlord-Tenant Law

Landlord-tenant law is the body of statutes and ordinances governing the legal relationship between property owners and renters, defining their rights and responsibilities regarding leases, rent, maintenance, and evictions.

Intermediate13-14 min

Lease Agreement

A legally binding contract between a landlord and a tenant that outlines the terms and conditions of renting a property, including rent, duration, and responsibilities.

Beginner18-20 min

Security Deposit

A security deposit is a refundable sum of money collected by a landlord from a tenant at the start of a lease to cover potential damages, unpaid rent, or other lease violations.

Beginner13-14 min

Property Management

Property management is the professional oversight and operation of real estate, typically rental properties, on behalf of an owner, handling tasks from tenant acquisition to maintenance and financial reporting.

Beginner11-12 min

Work Order

A work order is a formal document used in real estate to authorize and track maintenance, repairs, or other services needed for a property. It ensures clear communication and accountability.

Beginner2-3 min

Operating Expenses

Operating expenses are the ongoing costs of running and maintaining a real estate investment property, excluding mortgage principal and interest payments, and capital expenditures.

Beginner13-14 min

Rent Collection

Rent collection is the systematic process by which landlords or property managers receive rental payments from tenants, encompassing payment terms, processing, tracking, and handling delinquencies to ensure consistent cash flow for investment properties.

Intermediate12-15 min

Real Estate Investment Budgeting

Real estate investment budgeting is the process of creating a detailed financial plan to estimate all expected income and expenses associated with an investment property, guiding financial decisions and ensuring profitability.

Intermediate14-15 min